Look Left – Beginning of the end on the NHS bill

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• The coalition of support for the government’s NHS reforms is falling apart at an alarming rate. The health and social care bill, always contentious, has lost the support of the Financial Times, ConservativeHome, and three cabinet ministers this week alone.

On Tuesday, it became clear that the government was having real second thoughts about the legislation, as news came through that Number 10 was… well, upset.

“Andrew Lansley should be taken out and shot. He’s messed up both the communication and the substance of the policy.”

But as Shamik Das wrote, this scapegoating of Andrew Lansley is just an attempt by the prime minister to abdicate responsibility for a bill that has his fingerprints all over it:

• In July 2010, David Cameron, alongside Nick Clegg and Andrew Lansley, personally signed the foreword to the white paper – “Equity and Excellence: Liberating the NHS” (pdf) – which set out the government’s NHS reorganisation plans.

• In April 2011, Mr Cameron told Sky News’s Dermot Murnaghan he had “been involved in designing these changes way back into opposition” with Mr Lansley, and takes “absolute responsibility with him for all the changes we are making”

• The prime minister has regularly defended the reorganisation inside and outside Parliament.

• Cameron’s former No. 10 adviser James O’Shaughnessy recently revealed that during the “pause” last year “it did take the energy of Steve [Hilton] and the prime minister and Oliver Letwin and others to keep pushing it through”

• And just last week, at PMQs, David Cameron made it clear he would not back down – even citing Tony Blair in his support.’

And at the end of the week, the news went from bad to worse for the prime minister.

First, the Financial Times wrote that the bill was a “mess” and should be dropped:

The paper begins by attacking the prime minister for failing to live up to his manifesto pledge to avoid top-down reorganisations of the NHS, but then praises the ultimate objectives of the bill. It lays the blame for its failings squarely at the feet of the “political skill”, or lack thereof, of the government, and Andrew Lansley in particular.

There is no easy escape from the mess the government has created. But its objective should be to pursue the course that offers the best chance of securing the substance of the reforms.

Dropping the bill and pursuing change without omnibus legislation looks on balance the better bet, even if it comes at a cost. The NHS is already adapting to the new structures. Some bureaucratic machinery might have to be rebuilt. Mr Lansley’s position would be weakened – perhaps fatally.

Then Tim Montgomerie wrote today on ConservativeHome that the NHS bill was “potentially fatal to the Conservative Party’s electoral prospects”:

“The greatest mistake of his time as prime minister has been to put it [The NHS] back at the centre of political debate…

“Many Conservatives think that the NHS needs fundamental reform but for far-reaching reform to succeed certain pre-conditions must be met.

“The public needs to have been persuaded that substantial change is necessary.

“The government cannot be distracted by other consuming projects but its best brains must be focused and single-minded in ensuring the policy’s success. The Whitehall machine needs to be prepared and co-operative.

We know the health profession is against the bill. We know the public are suspicious. We know it will make more bureaucracy not less, and will probably push up costs.

It is bad policy and bad legislation. Time to put it out of its misery.

• The Bank of England has announced it will perform a third round of Quantitative Easing, pumping another £50 billion into the economy.

But as Josh Ryan-Collins of the New Economics Foundation pointed out, the risk is that that money will stay floating around the financial sector, rather than going where it’s needed:

The hard truth is that commercial banks are still in a process of ‘de-leveraging’, more keen on getting their loans repaid and building up their capital base than making new loans to productive businesses in what is perceived to be a risky real economy.

Evidence suggests the additional funds provided by QE are more likely to be used by banks to create more speculative credit, not least commodity speculation, that provides shorter term returns. As a result, the money supply in the real economy is contracting just at the point where new investment is most needed.

While the central banks have undoubtedly helped banks improve their balance sheets, these emergency measures are precisely that – emergency. They have done little to help the ailing economic situation. Instead, without lending requirements, the banks have continued their post-credit crunch over-reaction in refusing to lend.

The Bank has rightly argued that the scheme of printing new money and buying government assets with it has helped keep a lid on borrowing costs and inflation. But there is little evidence that banks have passed on the effects to businesses.

In fact, QE has actively hit pensioners’ incomes by depressing annuity rates by up to 25 per cent. What we have, is a situation where extra money worth around 20 per cent of our annual GDP has been printed, yet lending is stagnant as is the UK economy. The stand-off between government, the banks and customers continues.

The fact is, though, that while there may be better options than QE – from the green investment bank proposed by Ryan-Collins to the stronger lending targets Fox wants – it is still better than nothing, which is what some right wing commentators would want.

Today, Tony Dolphin was forced to defend the policy against one of them:

Imagine George Osborne were to stand up in the House of Commons and declare that, despite the risk of a new economic crisis, he had ordered the Bank of England to end its policy of quantitative easing because of its effect on annuity rates and the income of pensioners.

Furthermore, interest rates would in future always be maintained at a level of two per cent or above. And no, he would not be relaxing fiscal policy because maintaining the UK’s credibility and credit rating was still of primary importance.

As a result, he might add, business and consumer confidence was expected to collapse, there would be a sharp increase in mortgage rates and the Office for Budget Responsibility is now forecasting a deep recession and youth unemployment of 1.5 million in 2013.

This seems grossly unfair on the current generation of school and college leavers, but the alternative is poorer pensioners and that is unacceptable.

• With just 83 days until the London mayoral elections, the race is heating up, but it’s also getting dirty, with Ken being accused of homophobia and Boris of racism.

Both stories came from a pair of interviews by Jemima Khan of the New Statesman.

Ken, talking about the changing nature of political parties’ relationship to homosexuality, told Khan:

[The public] should be allowed to know everything, except the nature of private relationships – unless there is hypocrisy, like some Tory MP denouncing homosexuality while they are indulging in it…As soon as Blair got in, if you came out as lesbian or gay you immediately got a job. It was wonderful…you just knew the Tory party was riddled with it like everywhere else is.

That is probably wise. As Ken himself has remarked in the recent past, he was campaigning for gay rights when Tories were campaigning for Section 28. Some of us are old enough to recall the filth thrown at him by Tory newspapers and commentators for his trouble. I don’t recall the likes of Norman Tebbit rushing to his defence at the time.

Khan also reports her interview with Boris:

“I’ll tell you what makes me angry – lefty crap,” he thunders in response. Like? “Well, like spending £20,000 on a dinner at the Dorchester for Sinn Fein!”

That dinner was in fact the annual St Patrick’s day dinner. Which cost the taxpayer nothing. And garners enough profit each year to donate to an Irish community charity and the St Patrick’s day parade.

Hardly lefty crap.

Progressive of the week:

Up is down, black is white, and Tim Montgomerie is our progressive of the week. Not only for coming out against the NHS bill, but also for the strong support of gay marriage he gave on Monday, while very definitely maintaining a conservative case for it:

David Cameron has been right to support same-sex marriage from the first days of his leadership. If marriage is embraced as an institution of relevance to all people I hope we will begin to see the kind of pro-marriage public policy that exists in nearly all other developed countries.

By making social conservatism if not fashionable again, but certainly acceptable, I think, for example, it will be easier to see the kind of pro-marriage tax policies that exist in every other European state (and which, David Binder noted yesterday on ConHome, can be more pro-poor than raising the income tax threshold).

I hope, over time, we will get to a policy where we can combine gay rights with religious liberty. On occasions – such as with Catholic adoption agencies – religious liberty has been compromised in unacceptable ways.

The government has promised that any gay marriage bill will protect the rights of religious groups to hold firm to their view that marriage must remain between a man and a woman. I may no longer share other Christians’ opposition to this social reform but we should live in a society where the state guards freedom of religion and association.

Soon I hope we’ll get to that position which I described at the beginning of this blog. Gay people as full members of social institutions. Religious liberty protected. And public policy dedicated to building up the family and all of the benefits that it brings to society.

Regressive of the week:

Tory economist Andrew Lilico, less for his defence of parents’ right to hit their children (which has its defenders on the left as well) and more for his bizarre leaps of logic used to do so, as Daniel Elton reported:

His argument basically runs as follows:

1) Whether the evidence suggests smacking is good or bad for a child is irrelevant, as there’s no such thing as a perfect parent anyway, and evidence-based policy-making when it comes to smacking leads to a totalitarian state.

2) There may be no disciplinary alternative to smacking, so the choice for many is smacking or no discipline whatsoever

‘The Bank of England has had independent control over monetary policy since 1998 and therefore will continue to take Scotland into account’.

Not so. The Bank of England is currently obliged to regard the effects its decisions will have on Scotland. Without Scotland being part of the UK and with no currency board, this will not apply. In other words, decisions that have an impact on Scotland will be taken in another country that is focused on stabilising the national economy, not the Scottish one.

Instead of actually attaining independence, a separate Scotland will ironically tie itself to the rest of the UK through the importation of the effects of monetary policies conducted by the Bank of England.

The independent Library research paper states that it is thereby “more directly and irrevocably exposed to instability in [the rest of the UK]” by sharing a currency and adhering to the decisions by the central bank on matters of inflation and interest rates.